Mahindra Reva draws up growth strategy as powertrain maker

Mahindra Reva, with a new branding as Mahindra Electric for its business, wants to grow more as a powertrain supplier. Three-fourth of its business may come from powertrains by 2019.

Sumantra B Barooah By Sumantra B Barooah calendar 09 Aug 2016 Views icon14552 Views Share - Share to Facebook Share to Twitter Share to LinkedIn Share to Whatsapp
Electrifying models, for M&M and other OEMs, will be a faster route for Mahindra Reva to enhance its business scale than by developing new electric vehicles.

Electrifying models, for M&M and other OEMs, will be a faster route for Mahindra Reva to enhance its business scale than by developing new electric vehicles.

The journey for Bangalore-based Mahindra Reva (earlier called Reva Electric Car Company) started as a pioneer in electric vehicles in India when the first vehicle was launched in 2001.

Fifteen years later, the company is realigning its strategy to achieve success. From being a ‘car maker’, Mahindra Reva is set repositioning itself more as an electric powertrain provider, which also makes electric cars. If things move as planned, by 2019, 75 percent of Mahindra Reva’s business will come from the powertrain business and the rest from selling vehicles.

Chasing the critical scale

The branding of the business as Mahindra Electric in June this year is part of this strategy. “Why are we going Mahindra Electric? Because in my mind, if we have to achieve scale. Only through scale can you bring the cost down. So for us to achieve scale, it’s impossible to create new vehicles constantly. It is much easier for us to power existing vehicles,” Arvind Mathew, CEO, Mahindra Reva Electric Vehicles, told Autocar Professional.

van-3-quarter

The recently launched eVerito is one example of the revised business strategy. The introduction of the electric version of the Supro minivan is expected next month. Both these vehicles are from the Mahindra stable, but Mahindra Reva is also looking to supply to other OEMs. No concrete orders yet, but there’s some feeler. “One of our main advantages is that we are still one of the most affordable electric drivetrains around, in terms of value for money. We aren’t Tesla, and we don’t promise 300 miles of range, but for affordable powertrains with very specific applications, I think we are still the best,” claims Mathew. Mahindra Reva currently has powertrains ranging from 19kW to 80kW power. The company is betting on this move for a turnaround in its business. Mahindra Electric, a few years down the line, wants to see itself as a story similar to the ‘Intel inside’ story. The product facing the consumer may be of any brand, but whichever it is, will wear a ‘ME’ badge too.

reva1

For the business operations to be at a comfortable stage, the scale needs to increase significantly, as high as by around 10 times. Mahindra Reva has sold only around 6,000 vehicles till date.

The installed annual production capacity of its plant in Bangalore is 30,000 units. Hence, some global markets with a sizeable EV segment would be tapped soon to improve capacity utilisation and thereby overall revenue. “This is not just an India play. I am finding that until India wakes up, I have to depend on other countries to up my volumes,” says Mathew. So, Europe and China are the main focus regions.

Europe is not new to Mahindra Reva as it already has a presence there, albeit in a small way now. Mahindra Reva recently launched the e2O in the UK (the older-gen Reva-i is present there since 2003). What will be very crucial is the entry to, and business growth in China.

Mission China

In 2015, China became the world’s largest market for EVs. It sold nearly 189,000 passenger EVs, a scorching growth rate of 223 percent over the previous year! Reason enough for a China strategy to be on “highest priority list” of Mathew. The company has been exploring the Chinese market for a few years now, but a clear vision is in place now to tap the “huge opportunity”.

mmexport1466074167894

Mahindra Reva wants to strike a partnership or two with Chinese OEMs. It wants to make this move soon as the incentive window for EVs in China closes in 2020. “The growth has just been phenomenal in the last 18 months, and with a very clear forecast as to when the incentives will go away, we have to act fast,” says Mathew. The regulation in the Chinese EV industry requires a foreign player to partner with a local company who has been manufacturing vehicles for at least three years.

If things progress as planned, Mahindra will have a presence in the Chinese EV market soon, but not as a carmaker. “If and when we do sign an agreement, yes, you will have a vehicle with a Chinese brand but there will be an ME (Mahindra Electric) logo on it."

Mathew wants to build Mahindra Reva’s business as a supplier of electric powertrains because that gives the company a better chance to get the much-needed economy of scale, and a better chance to turn profitable.

arvind-mathew

The China strategy may look promising, but how can a foreign player meet the low-cost levels in China and also be competitive? Mahindra Reva hopes to save costs as it will be locally sourcing a lot of the components, including the batteries, which it currently imports from China.

Mathew is betting on something else to put the ME logo on Chinese EVs. “What I don’t know whether a lot of my Chinese partners will have is the intellectual property. In addition to having electric drivetrains, my cars have a lot of telematics and analytics inside. They are not just dumb electric cars. There is a lot of data being shipped back to our servers. I think if I can bring that value to a Chinese partner, source the components in China, I would be very competitive,” says Mathew.

Tapping advanced European markets  

Simultaneously, Mahindra Reva is also looking at entering new markets in Europe. Norway (70 percent growth in EVs in 2015), a country which supports EVs strongly, along with France, Italy and the Netherlands are markets that are on Mahindra Reva’s radar. The Netherlands particularly interests Mathew because there’s a proposal in that country to ban all cars with internal combustion engines by 2025. Petrol or diesel cars are not the only ones causing pollution in Netherlands. “And their problem, more than cars, is boats, as Amsterdam has a lot of canals, and there are a lot of boats with diesel engines going around, so the Netherlands is an interesting place for me,” explains Mathew. The opportunity for EV makers there is also reflected by Tesla’s move to set up its first factory outside the USA, in Netherlands.

img-9394

The Europe story began long ago for the Indian EV maker when it launched the Reva-i in London in 2003. It was known as the G-Wiz there. But the first launch in the UK, after Mahindra & Mahindra took control of the company, was in April this year.

The unforeseen Brexit development could throw plans off gear. Though the development has led to some “confusion” which will take some to settle down, Mathew also expects opportunities to arise out of Brexit. Once Britain is out of the EU, it will be able to negotiate trade deals independently which, currently, may not be possible. For example, a company like Mahindra Reva has a disadvantage against European EV makers which can go into the UK duty-free. “I am paying 15 percent. So for me, I can negotiate a separate deal with the UK, which I can’t do right now because there’s already a deal going on with the EU and India which hasn’t been ratified. Until that has been ratified, all these deals won’t happen. So, there are opportunities downstream, there’s no doubt about it. But in the short term it could be a bit of a rocky ride,” explains Mathew. 

mahindra-reva-e20-graphic

While the international plans take shape, the ride at home is yet to be a smooth one. It could get better as Mahindra Reva replaces internal combustion engines with its electric powertrains in more vehicles. Experiments are underway to tap new avenues. “We’re already experimenting on people movers in Bangalore and Delhi, and now, we want to look at cargo, not heavy cargo, but last-mile connectivity, like post office, e-commerce services,” shares Mathew. He wants to implement completely out-of-the-box ideas and “create opportunities where none exist” today. 

You may like: Mahindra EVs seeing greater traction in commercial segment

RELATED ARTICLES
BRANDED CONTENT: Recognising and empowering the crucial role mechanics play in the automotive ecosystem

auther Autocar Pro News Desk calendar18 Jun 2024

SKF India's initiative to support and honour CV mechanics through their "Install Confidence, Install SKF" truck activati...

Vredestein launches new 21/22 inch tyres for premium SUVs

auther Autocar Pro News Desk calendar17 Jun 2024

The 115-year-old premium European tyre brand owned by Apollo Tyres since 2009 is enhancing its market presence in India ...

New Tata Nexon rolls out from repurposed Sanand Plant

auther Autocar Pro News Desk calendar17 Jun 2024

Within a year of acquiring the former Ford plant in Sanand, Tata Motors has successfully repurposed it and rolled out th...